william schran on sat 11 oct 03
Ran across this site and thought many of the items might be
interesting to this forum -
http://www.paartistentrepreneur.com/
Bill, no affiliation, don't live in Pa.
Paul Raymond on tue 18 nov 03
Does anyone have any advice/info about starting a business. I'm thinking about doing so before the end of the year so I can write off the equipment I purchased. What are the pros/cons of doing this? Thanks.
Paul Raymond
Franklin, TN
Steve Slatin on wed 19 nov 03
Cindi --
You're right, but while you don't need to be profitable after two years,
you'd better expect to be audited if you're a potter and you're not.
Most businesses benefit from the obvious presumption that they are
engaged in a for-profit operation, successful or not. Why? Because the
work being done is something that most folks wouldn't do at all except
for money. Some of the things people on this list do that are going to
benefit from the presumption of business motive include commercial
cleaning, manufacturing kitchen utensils, etc.
Every challenged business claim I ever heard of involved a business
which is typically a hobby. Making model planes, knitting, pottery,
raising dogs/cats/horses ... they all suffer from the fact that most
practitioners aren't doing it primarily for income, even though their
products are often sold. There are professionals in all these fields,
though, and when challenged they deal with the IRS without any real
problems.
Some guy could buy a few nice guitars, and pick up a couple of bucks
playing in a coffee house, but never convince the IRS that a legitimate
business existed. Probably the IRS is right -- a few nice guitars can
easily run $5000 bucks -- how many sets will he have to play to recover
the cost of the instruments? Do we want to have every musical wannabe
writing off the cost of equipment, and so on? I think there are too
many talentless geeks with PRS axes and walls of amps already, I don't
want to encourage that kind of behavior ...
-----Original Message-----
From: Clayart [mailto:CLAYART@LSV.CERAMICS.ORG] On Behalf Of Cindi
Anderson
Sent: Wednesday, November 19, 2003 3:36 PM
To: CLAYART@LSV.CERAMICS.ORG
Subject: Re: starting a business
You do not have to be profitable within 2 years (think about all the dot
coms that never made money!) The rule is that you "have to intend to
make a
profit", which means that you run your business in a business-like
manner,
keeping records, etc. If you make money in any 2 of 5 years, you
automatically are presumed by the IRS to be a legitimate business. But
you
don't even have to do that if you can show you are trying to make a
profit.
Here are some other links that may be useful.
http://www.statetaxcentral.com/
http://www.comp.state.nc.us/ncic/pages/all50.htm Workers Comp
http://www.entrepreneur.com/
http://www.sba.gov/ Small Business Administration
http://www.sba.gov/sbdc/ Small Business Development Centers
Cindi
Fremont, CA
Elaine Ray on wed 19 nov 03
Even if you do the mileage deduction you can list as a business expense the
"business %" of your insurance, registration, and any auto loan interest.
I use MacInTax (or it may now be called TurboTax) and they have an easy step
by step way to fill out tax info. I use the home businees version.
Ask around with other small business owners in your area and talk to an
accountant that someone you trust recommends.
Good luck and happy paper work keeping!
Elaine Ray
Raleigh, NC
----- Original Message -----
From: "wayneinkeywest"
To:
Sent: Wednesday, November 19, 2003 10:33 PM
Subject: Re: starting a business
> Cecilia:
> According to what I've been told by my accountant,
> you have two ways to go with a vehicle. If you use
> the vehicle ONLY for business purposes, you have
> a choice of wither the mileage deduction OR you
> can write off actual expenses.
> If you use the vehicle "part-time" for business
> purposes (and part personal I assume) you cannot
> use actual expense, and must rely on mileage.
> And "you had better keep darn good records."
> (He said I could quote him :>)
>
> In my case (100% business use), I write off the
> actual cost. This lets me deduct the vehicle
> payment, the insurance premiums, all
> maintenance and fuels, and property (tangible
> property) taxes. Works out much better for us than
> the mileage allowance, since all our work is
> done in one smallish city (in Florida).
> And I do indeed keep "darn good records"
> Wayne Seidl
>
>
> > Mileage, however, is one of those things that can really add up, and is
> > deductible as an expense even if it causes you to show a loss for the
> year.
> > Better be sure and have written records of it, though.
> >
> > I'd be interested to hear if other's have more information.
> >
> > Cecilia
>
>
____________________________________________________________________________
__
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.
>
Gary Ferguson on wed 19 nov 03
That's true, but you want to have a separate account for all your business
transactions. Otherwise, if you (or your business) is ever audited, you've
just opened your books up for both.
You will also survive the IRS Hobby/Business test better if you have
separate business accounts (checking, credit cards, etc.) than if you
combine everything with your personal accounts.
Gary Ferguson
Raku Clay Artist
Nampa, ID 83687
Raku Gallery and Glaze Collection at: http://www.garyrferguson.com
Subscribe to Just Raku Newsletter at http://www.JustRaku.com
Just Raku Logowear at: http://www.cafepress.com/justraku
----- Original Message -----
From: "Simona Drentea"
To:
Sent: Wednesday, November 19, 2003 6:13 PM
Subject: Re: starting a business
> << Once you've come up with a name for your business, you need to register
the
> name with the state you're in. >>
>
> Though you may not even need a name. My tax person said as a Sole
Propieter
> I could use my own name & then I wouldn't need to even have a separate
acct.
> I can just use Quicken that I use for my personal finances & create
categories
> for different business expenses & income. This may vary by state, I don't
> know.
>
> Simona in Colorado
>
>
____________________________________________________________________________
__
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.
Jeremy/Bonnie Hellman on wed 19 nov 03
Actually Wayne, the test is that you need greater than 50% business use to
be able to deduct the actual expenses rather than the "cents per mile" that
the IRS dictates.
You must elect to use the "cents per mile" option, rather than actual
expenses, in the first year you put the vehicle into service for your
business. You cannot switch from actual expenses to "cents per mile" after
the first year.
Also, if you use more than one vehicle at a time for business, you MUST use
the actual expenses, NOT the "cents per mile" method.
My informal observation is that if you drive a lot of miles in your
business, you'll be able to deduct more over several years by using the
"cents per mile" option.
When I prepare tax returns for clients, I'll normally discuss the number of
miles they expect to drive each year, approximately what percent of total
miles this is, whether they are reasonably sure their business use will
exceed 50% every year the vehicle is used in their business, how often they
replace their vehicle, whether they are able to use only one vehicle for
business at a time (if they can use one for business and the other vehicle
for non-business use, if they have 2 cars or trucks available for use), what
they generally do with their business cars when they're done (sell it
outright, trade it in, let another family member use it). Oh, yes, we'll
also discuss what kind of record keeper the client is, because tracking
actual expenses requires more record keeping effort than using the cents per
mile.
Then unless the answer of whether to use actual or "cents per mile" is
obvious for one reason or another, I'll chart it out and let the client
decide.
Keeping 'darn good records' is always a plus and highly recommended.
The reality is that each person should be consulting his/her own tax
advisor, or working out the potential deduction over at least several years,
before deciding what to do in the first year of ownership of an under 6,000
lb business vehicle. I am not trying to cover all situations here, so
consider this my disclaimer about not giving you tax advice in this email.
My other thought, as a CPA who earns her living doing tax work and other
financial work, is that I don't understand why business owners, particularly
new business owners, would want to spend all the time required to learn the
tax code, rather than hire an expert to guide you. It just seems to me to be
a remarkably inefficient way to spend a lot of time, to prepare ONE tax
return, your own. And often you'll save more money by hiring a CPA
experienced in working with artists to do your work, rather than doing it
yourself. But I've already told you my bias. And if you find a CPA who
loves your work, you may find one who is willing to trade services with you.
Bonnie
Bonnie D. Hellman
CPA in PA & CO
----- Original Message -----
From: "wayneinkeywest"
To:
Sent: Wednesday, November 19, 2003 8:33 PM
Subject: Re: starting a business
> Cecilia:
> According to what I've been told by my accountant,
> you have two ways to go with a vehicle. If you use
> the vehicle ONLY for business purposes, you have
> a choice of wither the mileage deduction OR you
> can write off actual expenses.
> If you use the vehicle "part-time" for business
> purposes (and part personal I assume) you cannot
> use actual expense, and must rely on mileage.
> And "you had better keep darn good records."
> (He said I could quote him :>)
>
> In my case (100% business use), I write off the
> actual cost. This lets me deduct the vehicle
> payment, the insurance premiums, all
> maintenance and fuels, and property (tangible
> property) taxes. Works out much better for us than
> the mileage allowance, since all our work is
> done in one smallish city (in Florida).
> And I do indeed keep "darn good records"
> Wayne Seidl
>
>
> > Mileage, however, is one of those things that can really add up, and is
> > deductible as an expense even if it causes you to show a loss for the
> year.
> > Better be sure and have written records of it, though.
> >
> > I'd be interested to hear if other's have more information.
> >
> > Cecilia
>
>
____________________________________________________________________________
__
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.
>
Jeremy/Bonnie Hellman on wed 19 nov 03
Cecilia,
You're right that you can't use section 179 expense to create or increase a
business loss on a tax return with no other earned income that year, but an
individual can use a Section 179 loss against other income on that tax
return. That means that your business loss, stemming from Sec 179
deductions, CAN be deducted against your W-2 income or your spouse's W-2
income.
You may not want to do this under some circumstances, particularly if you're
in a low tax bracket that year, or if you feel you're going to need the
depreciation in future years, but you can do it if there is other earned
income on the tax return. There are other reasons where you might choose not
to take a Sec 179 depreciation deduction, and instead depreciate the asset
over what the IRS tells you is its useful life.
Bonnie
Bonnie D. Hellman
CPA in PA & CO
----- Original Message -----
From: "Cecilia Wian"
To:
Sent: Wednesday, November 19, 2003 3:50 PM
Subject: Re: starting a business
> Just a short note about 'writing it off'. You can only deduct (write-off)
up
> to the limit of what you actually declare as sales or gross profit. Of
> course you also have Spend the money to be able to declare it an expense.
If
> I remember correctly, you can't use the section 179 expensing to create a
> loss. Anything large item purchases that kick you into a loss have to be
> depreciated over 5-7 years. That means you get a portion of the cost of
the
> item as an expense in each year.
>
> Mileage, however, is one of those things that can really add up, and is
> deductible as an expense even if it causes you to show a loss for the
year.
> Better be sure and have written records of it, though.
>
> I'd be interested to hear if other's have more information.
>
> Cecilia
>
> ----- Original Message -----
> From: "David Beumee"
> To:
> Sent: Wednesday, November 19, 2003 1:39 PM
> Subject: Re: starting a business
>
>
> > > Does anyone have any advice/info about starting a business. I'm
thinking
> > about
> > > doing so before the end of the year so I can write off the equipment I
> > > purchased. What are the pros/cons of doing this?
> >
> > Once you've come up with a name for your business, you need to register
> the
> > name with the state you're in. I keep track of business related
> expenditures
> > through a business checking account, and I write a check for any
business
> > related purchases, which produces a written record for tax time. I also
am
> > careful to make entries in my check register of business related
> purchases.
> > This way when I enter my transactions into Quicken, it's easy to
> categorize,
> > and the program is set up to produce a detailed printout that makes
> filling
> > out Schedule C easy at tax time, including writing off the equipment you
> > bought. Keep an auto mileage log during the year as well. You'll be
> surprised
> > how much use of the car is business related, and the deduction comes
> straight
> > off the top at tax time.
> >
> > David beumee
> > Lafayette, CO
> > > Does anyone have any advice/info about starting a business. I'm
thinking
> about
> > > doing so before the end of the year so I can write off the equipment I
> > > purchased. What are the pros/cons of doing this? Thanks.
> > >
> > > Paul Raymond
> > > Franklin, TN
> > >
> > >
>
____________________________________________________________________________
> __
> > > Send postings to clayart@lsv.ceramics.org
> > >
> > > You may look at the archives for the list or change your subscription
> > > settings from http://www.ceramics.org/clayart/
> > >
> > > Moderator of the list is Mel Jacobson who may be reached at
> melpots@pclink.com.
> >
> >
>
____________________________________________________________________________
> __
> > Send postings to clayart@lsv.ceramics.org
> >
> > You may look at the archives for the list or change your subscription
> > settings from http://www.ceramics.org/clayart/
> >
> > Moderator of the list is Mel Jacobson who may be reached at
> melpots@pclink.com.
> >
>
>
____________________________________________________________________________
__
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.
>
Simona Drentea on wed 19 nov 03
Talk to your tax advisor to find out what type of business entity makes the
most sense for your situation. Also, homeowner's insurance usually doesn't
cover home businesses & equipment. so if ur at home, chk into insurance, esp.
for liability in case you burn the 'hood down or a customer trips on your steps.
If u sell in your own state you'll have to collect state tax & possibly
other local taxes, so you have to research that. If a room in your home is solely
devoted to your business, talk to your tax person about whether it makes
sense for you to take the home office deduction. it may or may not depending upon
your situation. I'm sure those on the list who are actually in business will
have more input, I'm just starting mine up.
Simona in CO
<< Does anyone have any advice/info about starting a business. I'm thinking
about doing so before the end of the year so I can write off the equipment I
purchased. What are the pros/cons of doing this? Thanks.
Paul Raymond
Franklin, TN
>>
David Beumee on wed 19 nov 03
> Does anyone have any advice/info about starting a business. I'm thinking
about
> doing so before the end of the year so I can write off the equipment I
> purchased. What are the pros/cons of doing this?
Once you've come up with a name for your business, you need to register the
name with the state you're in. I keep track of business related expenditures
through a business checking account, and I write a check for any business
related purchases, which produces a written record for tax time. I also am
careful to make entries in my check register of business related purchases.
This way when I enter my transactions into Quicken, it's easy to categorize,
and the program is set up to produce a detailed printout that makes filling
out Schedule C easy at tax time, including writing off the equipment you
bought. Keep an auto mileage log during the year as well. You'll be surprised
how much use of the car is business related, and the deduction comes straight
off the top at tax time.
David beumee
Lafayette, CO
> Does anyone have any advice/info about starting a business. I'm thinking about
> doing so before the end of the year so I can write off the equipment I
> purchased. What are the pros/cons of doing this? Thanks.
>
> Paul Raymond
> Franklin, TN
>
> ______________________________________________________________________________
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at melpots@pclink.com.
Steve Slatin on wed 19 nov 03
Paul --
Look up www.score.com and www.entrepreneur, especially
http://www.entrepreneur.com/article/0,4621,298543,00.html
This is not a decision to be taken lightly. Among other
things, you want to be sure that you will 'turn the corner'
to profitability after no more than two years of loss, and
be in a position to defend the position that you have a
bona-fide business to the IRS, if challenged.
I do recommend that anyone who is selling anything think of
the basics -- how much do materials cost, how much do utilities
cost, how much labor goes into a piece -- before pricing, even
if they are not planning to treat their work as a business. It's
not so much a problem in pottery, but in jewelry and some other
crafts with high input costs, you can actually lose money through the
tax system while making a pre-tax profit on your work. Most annoying!
-- Steve Slatin
-----Original Message-----
From: Clayart [mailto:CLAYART@LSV.CERAMICS.ORG] On Behalf Of Simona
Drentea
Sent: Wednesday, November 19, 2003 11:01 AM
To: CLAYART@LSV.CERAMICS.ORG
Subject: Re: starting a business
Talk to your tax advisor to find out what type of business entity makes
the
most sense for your situation. Also, homeowner's insurance usually
doesn't
cover home businesses & equipment. so if ur at home, chk into
insurance, esp.
for liability in case you burn the 'hood down or a customer trips on
your steps.
If u sell in your own state you'll have to collect state tax & possibly
other local taxes, so you have to research that. If a room in your home
is solely
devoted to your business, talk to your tax person about whether it makes
sense for you to take the home office deduction. it may or may not
depending upon
your situation. I'm sure those on the list who are actually in business
will
have more input, I'm just starting mine up.
Simona in CO
<< Does anyone have any advice/info about starting a business. I'm
thinking
about doing so before the end of the year so I can write off the
equipment I
purchased. What are the pros/cons of doing this? Thanks.
Paul Raymond
Franklin, TN
>>
________________________________________________________________________
______
Send postings to clayart@lsv.ceramics.org
You may look at the archives for the list or change your subscription
settings from http://www.ceramics.org/clayart/
Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.
Cecilia Wian on wed 19 nov 03
Just a short note about 'writing it off'. You can only deduct (write-off) up
to the limit of what you actually declare as sales or gross profit. Of
course you also have Spend the money to be able to declare it an expense. If
I remember correctly, you can't use the section 179 expensing to create a
loss. Anything large item purchases that kick you into a loss have to be
depreciated over 5-7 years. That means you get a portion of the cost of the
item as an expense in each year.
Mileage, however, is one of those things that can really add up, and is
deductible as an expense even if it causes you to show a loss for the year.
Better be sure and have written records of it, though.
I'd be interested to hear if other's have more information.
Cecilia
----- Original Message -----
From: "David Beumee"
To:
Sent: Wednesday, November 19, 2003 1:39 PM
Subject: Re: starting a business
> > Does anyone have any advice/info about starting a business. I'm thinking
> about
> > doing so before the end of the year so I can write off the equipment I
> > purchased. What are the pros/cons of doing this?
>
> Once you've come up with a name for your business, you need to register
the
> name with the state you're in. I keep track of business related
expenditures
> through a business checking account, and I write a check for any business
> related purchases, which produces a written record for tax time. I also am
> careful to make entries in my check register of business related
purchases.
> This way when I enter my transactions into Quicken, it's easy to
categorize,
> and the program is set up to produce a detailed printout that makes
filling
> out Schedule C easy at tax time, including writing off the equipment you
> bought. Keep an auto mileage log during the year as well. You'll be
surprised
> how much use of the car is business related, and the deduction comes
straight
> off the top at tax time.
>
> David beumee
> Lafayette, CO
> > Does anyone have any advice/info about starting a business. I'm thinking
about
> > doing so before the end of the year so I can write off the equipment I
> > purchased. What are the pros/cons of doing this? Thanks.
> >
> > Paul Raymond
> > Franklin, TN
> >
> >
____________________________________________________________________________
__
> > Send postings to clayart@lsv.ceramics.org
> >
> > You may look at the archives for the list or change your subscription
> > settings from http://www.ceramics.org/clayart/
> >
> > Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.
>
>
____________________________________________________________________________
__
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
melpots@pclink.com.
>
Cindi Anderson on wed 19 nov 03
You do not have to be profitable within 2 years (think about all the dot
coms that never made money!) The rule is that you "have to intend to make a
profit", which means that you run your business in a business-like manner,
keeping records, etc. If you make money in any 2 of 5 years, you
automatically are presumed by the IRS to be a legitimate business. But you
don't even have to do that if you can show you are trying to make a profit.
Here are some other links that may be useful.
http://www.statetaxcentral.com/
http://www.comp.state.nc.us/ncic/pages/all50.htm Workers Comp
http://www.entrepreneur.com/
http://www.sba.gov/ Small Business Administration
http://www.sba.gov/sbdc/ Small Business Development Centers
Cindi
Fremont, CA
----- Original Message ----- >
> This is not a decision to be taken lightly. Among other
> things, you want to be sure that you will 'turn the corner'
> to profitability after no more than two years of loss, and
> be in a position to defend the position that you have a
> bona-fide business to the IRS, if challenged.
Simona Drentea on wed 19 nov 03
<< Once you've come up with a name for your business, you need to register the
name with the state you're in. >>
Though you may not even need a name. My tax person said as a Sole Propieter
I could use my own name & then I wouldn't need to even have a separate acct.
I can just use Quicken that I use for my personal finances & create categories
for different business expenses & income. This may vary by state, I don't
know.
Simona in Colorado
wayneinkeywest on wed 19 nov 03
Cecilia:
According to what I've been told by my accountant,
you have two ways to go with a vehicle. If you use
the vehicle ONLY for business purposes, you have
a choice of wither the mileage deduction OR you
can write off actual expenses.
If you use the vehicle "part-time" for business
purposes (and part personal I assume) you cannot
use actual expense, and must rely on mileage.
And "you had better keep darn good records."
(He said I could quote him :>)
In my case (100% business use), I write off the
actual cost. This lets me deduct the vehicle
payment, the insurance premiums, all
maintenance and fuels, and property (tangible
property) taxes. Works out much better for us than
the mileage allowance, since all our work is
done in one smallish city (in Florida).
And I do indeed keep "darn good records"
Wayne Seidl
> Mileage, however, is one of those things that can really add up, and is
> deductible as an expense even if it causes you to show a loss for the
year.
> Better be sure and have written records of it, though.
>
> I'd be interested to hear if other's have more information.
>
> Cecilia
Simona Drentea on thu 20 nov 03
In a message dated 11/19/2003 6:24:05 PM Mountain Standard Time,
CW@WIAN-STUDIOS.COM writes:
<< Just a short note about 'writing it off'. You can only deduct (write-off)
up
to the limit of what you actually declare as sales or gross profit. >>
Did I misunderstand my tax woman? As a sole prop, since the money is all
co-mingled with your income from another job or spouse's job, I thought I could
write off against ALL our income, not just profit from the business. I was
quite sure this was what she said, but maybe I misunderstood??
Simona in CO
Steve Slatin on thu 20 nov 03
Wayne --
The actual expenses method (the IRS, alarmingly, calls this the "regular
method") is available whether you use the vehicle solely for business or
only for some of its mileage. The flat rate per mile method (or
"optional method") is much the easier, and if you have a reasonably
inexpensive vehicle (in purchase price and operating cost) it works
quite well.
To use the "optional method" you have to use it the first year the
vehicle is "placed in service." ("Placed in service" is not necessarily
the date you acquire the vehicle. It is the first day the vehicle is
ready and available for a specific, income-generating purpose. You
could buy a pickup, say, in 1983, and drive it for personal use only
until this year and then start a business and decide to convert use of
the pickup for that business -- then the "Placed in service" date is the
conversion date in 2003.) If you use the "regular method" in the first
year, you can use MACRS depreciation, but then you are never allowed to
use to the "optional method."
If you do use the "optional method" in the first year and then wish to
use the "regular method" in a subsequent year, you have to use a special
modifying factor based on existing mileage as of the beginning of the
year you are switching for depreciation, as described in Chapter 4 of
IRS Pub. 463.
There are also special limits on the amount you are allowed to
depreciate per year for automobiles; these limits exist so people high
up in corporations can't choose to go to business meetings in a Porsche
and get the taxpayer to foot the bill. (This limit is waived if the
vehicle GVW is over 6,000 pounds, which is where this thread started.)
Many brave accountants have attempted to master these many rules; all
have disappeared. It is my personal opinion that they were eaten by
wolves.
Automobiles are "listed property" for purpose of depreciation rules.
(So are personal computers, unless located at a business location
outside of the home.) This means that if you use it 50% or less for
business, no section 179 depreciation, no 30% 'bonus' depreciation, you
depreciate only using the alternative straight-line MACRS method.
(5-year property, mid-year convention for automobiles, if memory
serves.)
On the records issue, I couldn't agree more. Another thing that people
often forget is that tolls and parking are deductible, regardless of
which method you use. So, for example, if you live where I do and drive
to Bremerton, you keep track of miles -- if you take the ferry to
Seattle to go to SPS and get some clay, you save the receipt. If you
drop in at a shop to try to flog some stuff and need to park nearby, you
can record the parking and that's deductible too. More people lose more
on failing to keep records than ever do on choosing the less
advantageous mileage rules.
Unquestionably, your greatest flexibility and tax advantages come when
the vehicle is dedicated to business use and you use other
transportation for personal travel. IMHO, that's the way things ought
to be. And if your accountant can keep things straight for you, he's
worth what he costs. It takes tons of time to get up to speed on this
each tax year, and the changes some years can be brutal.
-- Steve Slatin, baffled that in November he still knows some of this
stuff when the tax season is long over and won't begin again for months.
-----Original Message-----
From: Clayart [mailto:CLAYART@LSV.CERAMICS.ORG] On Behalf Of
wayneinkeywest
Sent: Wednesday, November 19, 2003 7:33 PM
To: CLAYART@LSV.CERAMICS.ORG
Subject: Re: starting a business
Cecilia:
According to what I've been told by my accountant,
you have two ways to go with a vehicle. If you use
the vehicle ONLY for business purposes, you have
a choice of wither the mileage deduction OR you
can write off actual expenses.
If you use the vehicle "part-time" for business
purposes (and part personal I assume) you cannot
use actual expense, and must rely on mileage.
And "you had better keep darn good records."
(He said I could quote him :>)
Larry Kruzan on thu 20 nov 03
That is if you want to be a "sole-prop". There are certain advantages to
being incorporated too. It Is the best way in my mind. Pay yourself a
small income and have business buy what you need, housing, truck, utilities,
computers (except food, clothing, etc.) and you rent from business. Moves
business liability from you to the corp. in case you are sued for some
reason. Lots of advantages but more paperwork.
Larry
> That's true, but you want to have a separate account for all your business
> transactions. Otherwise, if you (or your business) is ever audited,
you've
> just opened your books up for both.
>
> You will also survive the IRS Hobby/Business test better if you have
> separate business accounts (checking, credit cards, etc.) than if you
> combine everything with your personal accounts.
>
> Gary Ferguson
John Rodgers on thu 20 nov 03
Something to keep in mind - a phrase my son laid on me - and it is true.
"Technology for Competitive Advantage"
Going low tech has it's place, but anything that makes work more
efficient is going to enhance your position in the market place. One
just has to decide hwo far you want to go into it. Example: one can
makea few plates per day using a rolling pin and two sticks. On the
other hand, an expenditure of $225,000 will get you an automated
industrial jiggering machine that will make 75 plates a minute.
Regards,
John Rodgers
Chelsea, AL
Paul Raymond wrote:
>Does anyone have any advice/info about starting a business. I'm thinking about doing so before the end of the year so I can write off the equipment I purchased. What are the pros/cons of doing this? Thanks.
>
>Paul Raymond
>Franklin, TN
>
>______________________________________________________________________________
>Send postings to clayart@lsv.ceramics.org
>
>You may look at the archives for the list or change your subscription
>settings from http://www.ceramics.org/clayart/
>
>Moderator of the list is Mel Jacobson who may be reached at melpots@pclink.com.
>
>
>
David Beumee on fri 21 nov 03
Steve Slatin wrote:
Among other
> things, you want to be sure that you will 'turn the corner'
> to profitability after no more than two years of loss, and
> be in a position to defend the position that you have a
> bona-fide business to the IRS, if challenged.
I've been a full time potter for twenty years, and I've turned a profit
twice, both times under a hundred dollars. The IRS has never challenged my
lack of profitability because I continually shown that I'm trying to make a
profit. And I do mean.
David Beumee
Lafayette, CO
> Paul --
>
> Look up www.score.com and www.entrepreneur, especially
> http://www.entrepreneur.com/article/0,4621,298543,00.html
> This is not a decision to be taken lightly. Among other
> things, you want to be sure that you will 'turn the corner'
> to profitability after no more than two years of loss, and
> be in a position to defend the position that you have a
> bona-fide business to the IRS, if challenged.
>
> I do recommend that anyone who is selling anything think of
> the basics -- how much do materials cost, how much do utilities
> cost, how much labor goes into a piece -- before pricing, even
> if they are not planning to treat their work as a business. It's
> not so much a problem in pottery, but in jewelry and some other
> crafts with high input costs, you can actually lose money through the
> tax system while making a pre-tax profit on your work. Most annoying!
>
> -- Steve Slatin
>
>
> -----Original Message-----
> From: Clayart [mailto:CLAYART@LSV.CERAMICS.ORG] On Behalf Of Simona
> Drentea
> Sent: Wednesday, November 19, 2003 11:01 AM
> To: CLAYART@LSV.CERAMICS.ORG
> Subject: Re: starting a business
>
> Talk to your tax advisor to find out what type of business entity makes
> the
> most sense for your situation. Also, homeowner's insurance usually
> doesn't
> cover home businesses & equipment. so if ur at home, chk into
> insurance, esp.
> for liability in case you burn the 'hood down or a customer trips on
> your steps.
> If u sell in your own state you'll have to collect state tax & possibly
> other local taxes, so you have to research that. If a room in your home
> is solely
> devoted to your business, talk to your tax person about whether it makes
> sense for you to take the home office deduction. it may or may not
> depending upon
> your situation. I'm sure those on the list who are actually in business
> will
> have more input, I'm just starting mine up.
>
> Simona in CO
>
> << Does anyone have any advice/info about starting a business. I'm
> thinking
> about doing so before the end of the year so I can write off the
> equipment I
> purchased. What are the pros/cons of doing this? Thanks.
>
> Paul Raymond
> Franklin, TN
> >>
>
> ________________________________________________________________________
> ______
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at
> melpots@pclink.com.
>
> ______________________________________________________________________________
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at melpots@pclink.com.
Simona Drentea on sat 22 nov 03
Now this is interesting to me b/c I've decided that what I want to do is make
raku full time. I am lucky that I won't be depending on the income, but I
expected to make a profit in the first year or 2. Is it common not to make a
profit in so many years? If so why? I sure hope it's not a Colorado thing ;-)
Thanks,
Simona
<< I've been a full time potter for twenty years, and I've turned a profit
twice, both times under a hundred dollars. The IRS has never challenged my
lack of profitability because I continually shown that I'm trying to make a
profit. And I do mean.
David Beumee
Lafayette, CO
>>
Steve Slatin on sat 22 nov 03
Simona --
I don't know about David's experience; it is my observation from doing
taxes
for the non-wealthy that most producers of handicrafts actually make a
(very) small profit, after the first year.
The first year, with equipment purchases, etc. is murder, whether you're
making jewelry, furniture, dolls, pottery or crocheted toaster covers.
You should probably expect losses, or perhaps just think of it as your
"investment cost."
The second year often shows just a break-even if you keep good records
and identify all of your costs. If you show a big profit, you're either
extremely lucky or not recording your costs. (I remember one guy who
was felling trees, splitting logs, and selling firewood. He thought he
had a good business, but wasn't checking mileage on his truck. He was
flailing the ever-living value out of his truck. Not that cutting and
selling firewood is a handicraft, it's just an example of poor business
records.)
Keeping track of expenses in the first year is frightening (you dread
taking out the notebook and entering yet another cost with no income on
the horizon), but highly desirable, as it helps you price your wares and
spot potential winners in your line. IF you do this, you may be able to
eke out a bit of profit in your second year while you're lining up
vendors, sale locations, and the like.
If you need to make money, you should have a business plan. It helps
you to know what you're trying to do. It doesn't need 6-color offset
printing and 40 pages of MBA mumbo-jumbo, but it should have a general
outline of your plans -- the market you hope to reach (sell from your
studio, craft fairs, or existing stores), a breakdown of your
anticipated costs (equipment, materials, utilities, professional
support) your target for sales (over at least the first 3 years), your
production standards (how much saleable material will you get from a
week or month's work), what's required in terms of liscensing, permits,
and zoning, and your goals (have a studio set up by when? Be able to
make sample items to show to potential vendors by when? Have so many
sale locations confirmed by when? Or whatever fits your particular
anticipations).
You may find that you are not interested enough in this level of stuff
to do it (you may think, 'Who cares? I'm paying the electric bill
whatever it is, and it's all part of my home's utilities anyway.') If
so, you've probably just proven to yourself that you aren't really
operating a business, and you should treat it as a hobby.
If this sort of stuff gets you interested, you're probably thinking in
business terms already, and a plan will take just a few hours to do,
organizing stuff you mostly have on hand already, and helping you to
focus on what you need to start thinking about. The great utility to a
plan, though, is it lets you know if you're on track or not. Did you
see a few months ago when Jonathon 'went pro' and got more than his
anticipated number of galleries right away? I don't know if he was
thinking of it as a business plan or not, but it was at least a part of
one, and he was beating his goal.
Best wishes -- Steve Slatin
-----Original Message-----
From: Clayart [mailto:CLAYART@LSV.CERAMICS.ORG] On Behalf Of Simona
Drentea
Sent: Friday, November 21, 2003 9:43 PM
To: CLAYART@LSV.CERAMICS.ORG
Subject: Re: starting a business
Now this is interesting to me b/c I've decided that what I want to do is
make
raku full time. I am lucky that I won't be depending on the income, but
I
expected to make a profit in the first year or 2. Is it common not to
make a
profit in so many years? If so why? I sure hope it's not a Colorado
thing ;-)
Thanks,
Simona
David Beumee on sun 23 nov 03
Simona wrote:
Is it common not to make a
> profit in so many years? If so why? I sure hope it's not a Colorado thing
Everyone's experience at making a living from selling pots is vastly
different because the range of expression is so wide and the audience is so
varied. I had a studio set up in Bozeman Montana when I graduated in '79, and
I produced porcelain pots at cone 6 in an electric kiln because that type of
kiln is all I could afford. I moved to the Denver area in '82 because I
thought there would be more of a market, and continued with cone 6 work until
1990 when I managed to buy a used gas kiln. I began an effort to make a living
exclusively from sales of pots in Jan. of '83, and it's been a rough go
financially, but we keep the bills paid and food on the table and even manage
to make it to NCECA sometimes. I'm not a production potter, so the wholesale
market was not successful for me. 50% take from a gallery makes it rough.
Building a mailing list for home shows is a long process. None of this makes a
big difference. I'm a potter. Clay is what I do. Making porcelain pots on the
wheel is the juice of life for me. I will not give up.
David Beumee
Earth Alchemy Pottery
Lafayette, co
> Now this is interesting to me b/c I've decided that what I want to do is make
> raku full time. I am lucky that I won't be depending on the income, but I
> expected to make a profit in the first year or 2. Is it common not to make a
> profit in so many years? If so why? I sure hope it's not a Colorado thing ;-)
>
> Thanks,
> Simona
>
> << I've been a full time potter for twenty years, and I've turned a profit
> twice, both times under a hundred dollars. The IRS has never challenged my
> lack of profitability because I continually shown that I'm trying to make a
> profit. And I do mean.
>
> David Beumee
> Lafayette, CO
> >>
>
> ______________________________________________________________________________
> Send postings to clayart@lsv.ceramics.org
>
> You may look at the archives for the list or change your subscription
> settings from http://www.ceramics.org/clayart/
>
> Moderator of the list is Mel Jacobson who may be reached at melpots@pclink.com.
Simona Drentea on mon 24 nov 03
<< Everyone's experience at making a living from selling pots is vastly
different because the range of expression is so wide and the audience is so
varied. >>
Excellent point. I'm still in that stage of thinking that I'll make $$
'cause my stuff is so beautiful, who wouldn't want to buy it? :-) Of course I
haven't actually attempted to sell anything yet LOL. Ignorance is bliss.
Thanks,
Simona
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